Tax Reliefs Help Fuel Boom in UK Screen Industries

PRODUCTION SPEND WORTH £7.9 BN IN A SINGLE YEAR – THE HIGHEST ON RECORD

An independent new report published this month demonstrates the huge value of the government tax reliefs across the UK’s screen industries, seeding unprecedented levels of production, creating thousands of jobs, growing businesses and infrastructure, generating record levels of inward investment, boosting exports of UK productions and services internationally and creating spillover benefits for other industries.

The report reveals that an estimated £632 million in tax relief seeded £3.16 billion in direct production spend in 2016, a 17% increase on 2015. UK-made productions generated £7.9 billion as the screen sector’s overall economic contribution (GVA), including £2 billion in tax revenues. Production spend which would not take place without the tax reliefs, known as additionality, doubled GVA to £4.1 billion in 2016.

Screen Business: How tax incentives help power economic growth across the UK is a comprehensive analysis of the economic contribution of the tax reliefs for film, high-end television and, for the first time, analyses the new tax reliefs for video games, TV animation programmes and children’s TV programmes. The report uses the latest complete dataset available from 2016.

The report has been produced by analysts Olsberg SPI with Nordicity, and commissioned by the BFI, working with industry partners including the British Film Commission (BFC), Pact, Pinewood Group, UK Interactive (Ukie), the UK Screen Alliance and Animation UK.

‘God’s Own Country’ filmed in Keighley, Haworth and Otley

Tax reliefs across Film, High-End Television, Video Games, Animaiton Programmes and Children's TV are powering unprecedented levels of production in the UK, generating an economic contribution of £7.9 billion in 2016

Direct spend on production generates record £3.16 billion in 2016 across all screen sectors, up from £2.70 billion in 2015 and doubling over 9 years

£1.72 billion from film production, a new record, 47% up from £1.16 billion in 2013

£896.7 million from high-end television production, more than double from £414.9 million in 2013

£389.9 million from video games development supported by tax relief, 70% up from £228.8 million in 2015

£97.1 million from animation television programme production, 27% up from £76.2 million in 2013

£61.0 million from children’s television programmes, the first year of tax relief

Growth of screen industries outstripping wider economy – 71% increase in FTEs in film, high-end television and animation television production between 2013 and 2016; higher levels of labour productivity than the UK average

Rapid growth of screen sectors generates over £850 million in capital investment in new production facilities right across the UK

From TV shows like The Crown, to films like Darkest Hour, and animations like Peppa Pig, our creative industries are intrinsic to the rich cultural fabric of the UK. But they’re also an important part of a dynamic and diversified economy, and a key component of our great, global trading nation. That is why this government is committed to supporting our highly-skilled and innovative creative industries through creative sector tax reliefs. I am confident that the creative industries will continue to grow, provide strong employment and be the face of British culture to the world in future years.

Rt Hon. Philip Hammond MP, Chancellor of the Exchequer

‘Paddington 2’ filmed at locations including Bilton Woods in Harrogate

The UK is a creative powerhouse for producing many award-winning films, shows and video games enjoyed by millions globally. It is home to incredible success stories such as James Bond, Batman Arkham, The Crown and Horrible Histories demonstrating that Britain is a hub for creativity. These fantastic statistics show investment in our screen industries is booming and government is committed to supporting their continued success through our tax reliefs and modern industrial strategy, which is helping our creative sectors go from strength to strength

Minister for the Creative Industries, Margot James

Production spend

Expenditure on feature film production in the UK has doubled in nine years since the film tax relief was introduced, from £849 million in 2007 to a record-breaking £1.72 billion in 2016. High-end television production has also boomed since the introduction of the high-end tax relief in 2013, with expenditure more than doubling over the ensuing three years from £414.9 million to £896.7 million. The video games tax relief which came into effect in 2014 has supported £389.9 million of development expenditure in 2016, up from £228.8 million in 2015. The animation and children’s television tax reliefs have helped these smaller but culturally vital sectors develop ‘greenshoots’ and generate expenditure of £97.1 million and £61.0 million respectively.

Technology has had a seismic impact in driving structural change and innovation in screen production and distribution as well as audience consumption of film, TV and video games.

Growth, jobs, productivity and tax revenues

The rate of productivity (the amount of economic output, GVA, per FTE across the tax relief screen sectors) across the tax relief supported screen sectors at £75,600 per FTE is higher than for the average for UK economy as a whole (£62,144). Video games delivered the highest rate of labour productivity in 2016 at £83,800 and visual effects (VFX) also generated relatively high labour productivity at £81,300.

The tax reliefs play a crucial role supporting the UK’s competitiveness as a creative destination, attracting international inward investment production in the face of strong global competition. They have also helped lead to a repatriation of high-end TV productions which would otherwise have been made outside the UK.

Attracted to the UK’s world-class skills, facilities and diverse locations, film and high-end television production attracted £1.97 billion of inward investment and international co-production in 2016, including projects from the US, Europe and other markets in 2016; 76% of the total spend on film and high-end television production. Inward investment in UK film production reached £1.38 billion in 2016, the highest ever recorded and a 11% increase from £1.24 billion in 2015. High-end TV attracted £554.2 million of inward investment and international co-production expenditure in 2016, a 28% increase on £431.6 million in 2015. The total amount of inward investment and international co-production spend attracted by all five sectors was over £2 billion in 2016.

Tax relief supported production is also fuelling further private sector investment with more than £850 million identified spend on facilities across the UK since 2013 to service the growth in production. New and developing studio spaces include Wolf near Cardiff, Pentland in Scotland, Church Fenton in Yorkshire, Belfast’s Harbour Studios, Dagenham in London, Shepperton Studios, Longcross Studios, Elstree Studios and the Littlewoods building in Liverpool.

The strength of the UK video games sector has attracted over £1.75 billion of inward investment since the introduction of the VGTR, with creative hubs across the UK including Brighton, Cambridge, Cardiff, Guildford, Glasgow, Edinburgh, Dundee, Liverpool, London, Manchester, Oxford, Sheffield, Leeds, Nottingham and Warwick/Leamington Spa.

In 2016, screen production supported by the tax reliefs generated £7.91 billion in GVA for the economy and 137,340 FTEs of employment in the UK. The employment and economic activity generated by screen production supported by the tax reliefs yielded £2.04 billion in tax revenue in 2016. Production activity across the tax relief sectors generated 48,330 direct and indirect FTEs of employment directly in production in 2016.

Over four years the tax reliefs have driven a 63% growth in production spend and a 62% increase in employment across film, high-end television and animation television programmes. The overall tax revenues across film, high-end TV and animation television programmes have grown by 67% from £1.11 billion in 2013 to £1.86 billion in 2016. All screen sector tax reliefs deliver a consistently growing return on investment through GVA.

Film, high-end TV and animation television programmes, the three sectors with the longest established tax reliefs, have grown their overall GVA contribution by 73%, from £4.19 billion in 2013 to £7.30 billion in 2016. Film was the largest contributor, generating £5.23 billion.

The growth in spend and investment within the UK screen infrastructure is stimulating further need for skilled people. The BFI’s £19 million investment plan supported through the National Lottery, announced last year, is addressing the need for 10,000 new entrants to keep the UK in the vanguard of global film production over the next five years.